The acceptance of cashless payments, such as credit, debit, pre-paid cards and mobile near field communication (NFC) payment readers, in unattended vending situations is becoming common. The first widespread use of unattended cashless payment systems was with gas pumps at filling stations. Other unattended vending situations include carwash facilities, roadside truck weigh scales, public massage chairs, and video rental kiosks, among others. More recently, cashless payments are used in commodity vending machines such as food, bottled water, toiletries, etc.
The unattended vending situations described herein generally involve low cost items, typically priced under $20.00. However, there are also unattended vending machines deployed utilizing cashless payments that vend higher valued items such as digital music players, DVD players, headphones, phone chargers, digital cameras, portable gaming devices, flash drives, gift cards, etc.
By their very nature of being unattended, cashless payment transactions are susceptible to fraud or security breaches. A vending machine may be in an isolated area with no one watching and may be susceptible to tampering, modification, or other unintended and unauthorized manipulation. Even when the equipment is in a public area a person could access and tamper with vending equipment by posing as service personnel.
One of the key fraud problems involves the theft of account information from a credit card or other cashless payment mechanism. There are at least five ways to steal or skim account numbers from existing vending systems: (1) Internal Skimming Device that is attached internally in the equipment to electrically collect account numbers from the data stream; (2) External Skimming Device that electrically collects account numbers from the data stream exiting the cashless payment device going to the payment processor; (3) Detection of RF Energy that is emitted from a legitimate reader/processor device as the account number data travels internally through the equipment; (4) Hardware/Software Hacking of the actual card reader; and/or (5) False Front Device that is attached over the actual card reader to capture data from a magnetic stripe card as it is entering the “real” card reader and can sometimes also include nearby hidden cameras to capture entry of PIN data associated with the cashless payment mechanism.
One potential approach to at least some of the skimming type of security problems is to encrypt the account information. Currently, there are some solutions available that can encrypt the account numbers within an encryption engine at or near the card reader read head. MagTek and others, for example, provide a card reader with a proprietary encryption engine encapsulated within the read head. However, these solutions are inadequate or have disadvantages that are barriers to effective application of this approach in electronic cashless payment systems because the entire card image is either encrypted such that the local controller cannot get access to portions of the data that may not need to be secured as robustly as account information, such as the expiration date, BIN number, and service code, or such information is left completely unsecured and can still be attacked by a skimming fraud.
The other kinds of fraud besides skimming are often referred to as a “Trojan Horse” type of fraud based on either hacked hardware or software or on a false front for the vending machine card reader. Approaches for defeating this kind of fraud rely on mechanical/electrical security in the form of locks or passwords on the card reader hardware/software, or on a detection of a false front on the vending machine. A number of schemes for detecting a false front have been proposed. One scheme uses infrared light paths that can detect when material has been added to the front of the reader. Another scheme uses a metal sensor to detect additional electronics has been added to the front. If a false front is detected the ATM machine would be shut down causing the display to go blank, hopefully discouraging a user from attempting to use the card reader. The following patents describe prior attempts to implement false front detecting systems: U.S. Pat. No. 7,602,909 to Shields, U.S. Pat. No. 6,422,475 to May, and U.S. Pat. No. 6,367,695 to Mair.
Once a person has obtained a stolen payment media, or created one using skimmed account numbers, financial fraud is difficult to stop. A stolen or skimmed account number can be easily used at an unattended electronic cashless payment system since there is no personnel available to check for an identification or to verify a signature to ensure that the person holding the card or payment media is the account holder. As a result, this type of fraud represents a significant loss to merchants an there is need for a secure solution to skimming and Trojan Horse fraud for cashless payment systems for such unattended vending machines and the like.